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Not Another Article on RPAPL 1304

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  • Posted on: Jul 15 2022

By Jonathan H. Freiberger

I say it all the time and I’m going to say it again, the readers of this Blog know that we frequently discuss numerous aspects of residential mortgage litigation.  See, e.g., [here] and the articles linked therein.  A related subtopic that gets much attention in this Blog is the pre-foreclosure notice requirements of RPAPL 1304See, e.g., [here], [here], [here], [here], [here], [here], [here], [here], [here], [here] and [here].  You may say “enough is enough”, but this stuff is exciting (and, no I do not need to get out more).  Just when you think that every nook and cranny of this statute has been addressed, the Appellate Division decides a case that touches upon something new.  Such is the case with Deutsche Bank National Trust Company v. Pariser, decided on July 13, 2022.

Before getting into Pariser, by way of brief background as noted in prior Blog articles, RPAPL 1304 requires that at least ninety days before commencing legal action against a borrower with respect to a “home loan” (as defined in the relevant statutes), a “lender, assignee or mortgage loan servicer” must: send written notice to the borrower by certified and regular mail that the loan is in default; provide a list of approved housing agencies that offer free or low-cost counseling; and, advise that legal action may be commenced after ninety days if no action is taken to resolve the matter.  One purpose of RPAPL 1304 is to enable defaulted borrowers to “benefit from the information provided in the notice and the 90–day period during which the parties could attempt to work out the default without imminent threat of a foreclosure action, in an effort to further the ultimate goal of reducing the number of foreclosures”.  CIT Bank N.A. v. Schiffman, 36 N.Y.3d 550, 555 (2021) (citation and internal quotation marks omitted).

The failure of the “lender, assignee or mortgage loan servicer” to comply with RPAPL 1304 will result in the dismissal of a foreclosure complaint (see, e.g., U.S. Bank N.A. v. Beymer, 161 A.D.3d 543 (1st Dep’t 2018)) when the issue is raised as an affirmative defense by the borrower (see, e.g., One West Bank, FSB v. Rosenberg, 189 A.D.3d 1600, 1602-3 (2nd Dep’t 2020) (citation omitted)).  Indeed, “proper service of the notice containing the statutorily mandated content is a condition precedent to the commencement of a foreclosure action.”  U.S. Bank N.A. v. Taormina, 187 A.D.3d 1095, 1096 (2nd Dep’t 2020) (citations omitted).  When failure to comply with RPAPL 1304 is raised as an affirmative defense, the plaintiff must demonstrate its compliance with the statute as part of its prima facie case.  Bank of America, N.A. v. Wheatly, 158 A.D.3d 736 (2nd Dep’t 2018) (citations omitted).

The facts of Pariser are typical.  Borrowers delivered a mortgage to lender to secure the obligation to repay a $500,000 promissory note.  (There were a series of assignments by which Deutsche Bank became the owner and holder of the subject note.  The term “lender” herein is used generically to refer to all past and present holders of the relevant paper.)  Borrowers defaulted in 2008 and, later that year, lender commenced a foreclosure action that was discontinued by stipulation in 2009.

Lender commenced the subject foreclosure action in 2015.  Lender moved for summary judgment to strike borrowers’ answer and for an order of reference.  Borrowers cross-moved for summary judgment dismissing the action as time-barred.  Supreme court granted lender’s motion and denied borrowers’ cross-motion.  Supreme court subsequently granted lender’s motion to confirm the referee’s report and for a judgment of foreclosure and sale.  Borrowers appealed.

The Appellate Division in Pariser decided several issues.  First, the Court, agreeing with supreme court, found that the action was not time-barred.  [Eds. Note: This Blog discussed statute of limitations issues in the context of mortgage foreclosure actions, inter alia, [here], [here], [here] and [here].]

However, the Court reversed supreme court and denied lender’s motion for summary judgment for numerous failures to comply with RPAPL 1304.  Initially, as to proof of proper service of RPAPL 1304 notices, the Court stated that proof of mailing “can be established with proof of the actual mailings, such as affidavits of mailing or domestic return receipts with attendant signatures, or proof of a standard office mailing procedure designed to ensure that items are properly addressed and mailed, sworn to by someone with personal knowledge of the procedure.”  (Citations, internal quotation marks and ellipses omitted.)  [Eds. Note: This Blog discussed mailing compliance issues regarding notices required by the RPAPL, inter alia, [here], [here], [here] and [here].]

In Pariser, the Court found that lender failed to establish that the notices were properly “mailed to each defendant by certified and first-class mail” because the “affidavit submitted in support of the plaintiff’s motion does not contain an attestation that the affiant had personal knowledge of the purported mailings nor does the affiant attest to knowledge of the mailing practices of the Law Offices of McCabe, Weisberg, and Conway, P.C., the entity that allegedly sent the notices to the defendants on behalf of the loan servicer.”  (Citations omitted.)  Further, the Court noted lender’s failure to “submit an affidavit of service or any document from the United States Postal Service establishing that the mailing actually occurred.”  (Citations omitted.)

The Court also found that lender failed to establish that the notices complied with RPAPL 1304 by including with the notice a list of the “five housing counseling agencies serving the region in which the subject property is located, i.e., the Mid-Hudson region (see RPAPL former 1304[2])”.[1]  [Eds. Note: This Blog discussed the counseling agency issue requirement [here].]  In this regard, the Court stated that “the list of housing counseling agencies annexed to the copy of the RPAPL notice submitted in support of the plaintiff’s motion included five agencies, three of which are located outside of the Mid-Hudson region. Although the list indicates that two of those three agencies serve ‘all of New York State,’ there is no evidence in the record to indicate the regions served by the third agency. Thus, the plaintiff failed to establish, prima facie, that all five of the agencies serve the Mid-Hudson region.”  (Citations omitted.)

Finally, the Court discussed an issue that has not been previously addressed by this Blog.  The RPAPL 1304 notices in Pariser, were allegedly mailed not by the “lender, assignee or mortgage loan servicer” as required by statute, but by lender’s counsel.  In determining that such notices were improper because counsel was not authorized to do so when the notices were sent, the Court stated:

The plaintiff further failed to establish that the RPAPL 1304 notices were sent by the “lender, assignee, or loan servicer” as required by the statute (see RPAPL 1304[1]). Here, the RPAPL notices were allegedly sent on August 7, 2014, by the Law Offices of McCabe, Weisberg, and Conway, P.C., on behalf of Ocwen Financial, the plaintiff’s loan servicer. However, the limited power of attorney authorizing Ocwen Financial to act on behalf of the plaintiff, which was submitted by the plaintiff in support of its motion, states that it was executed on and effective as of September 17, 2014.

[1]   Prior to January 14, 2020, RPAPL 1304 provided that “[t]he notices required by this section shall contain a current list of at least five housing counseling agencies serving the county where the property is located from the most recent listing available from department of financial services.”  On and after January 14, 2020, RPAPL 1304 provided that “[t]he notices required by this section shall contain a current list of United States department of housing and urban development approved housing counseling agencies, or other housing counseling agencies serving the county where the property is located from the most recent listing available from the department of financial services.  The list shall include the counseling agencies’ last known addresses and telephone numbers.  The department of financial services shall make available a listing, by county, of such agencies which the lender or mortgage loan servicer may use to meet the requirements of this section.”

Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.

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